The senior economists today suggested the President Dr Ram Baran Yadav to let the government bring a significantly smaller budget — of around Rs 16 billion — through ordinance for three to six months period.
"The government should bring a small sized budget of around 3.5 per cent -- according to the international norms -- of the total budget based on this fiscal year's actual spending," said senior economist Prof Dr Bishwhambher Pyakuryal, who was one of the five senior economists who met the President today.
At a time, when there is no Parliament, the budget has to be brought through ordinance because the salary-earning populace should not suffer due to political instability, he said, adding that the ordinance budget should have salary expenses, social security expenses and debt servicing.
"In absence of Parliament, if the government brings an expansionist budget of Rs 429 billion, it will fuel financial indiscipline and the government could always misuse, the five senior economists — Shambhu Sharan Kayastha, Bimal Koirala, Madan Dahal, Prithvi Raj Legal and Pyakuryal — briefed the President.
On one hand, the government has been unable to expedite the public spending — that could have created jobs and helped development works move forward — and on the other, the rate of the return of the budget that is spent also is negative in some of the projects, Pyakuryal said, adding that the expansionary budget would fuel inflation and make the private sector borrowing costlier hurting the private sector capacity to invest on productive sectors that would bring the economic growth down.
Had there been a normal situation and private sector willing to invest more, the expansionary budget would have helped them but at a moment it is suicidal, the senior economists added.
Meanwhile, the caretaker finance minister Barshaman Pun also briefed the President on budget preparation. He promised to bring the ordinance budget through the political consensus. But the government and the opposition political parties have not seen eye to eye after May 27.
"I am trying to bring budget based on minimum economic agenda in consultation with the political parties," Pun said, adding that the government will bring the complete budget for the fiscal year 2012-13 instead of what is being suggested by economists to bring for three months or six months.